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Victor P. Goldberg

In The Achilleas, the House of Lords gave the most recent interpretation of Hadley v. Baxendale and the limits on the recovery of consequential damages. Lord Hoffmann rejected the emphasis on foreseeability and “the requisite degree of probability of loss,” focusing instead on the tacit assumption of the parties. This chapter examines how the tacit assumption framework applies to the particular facts of The Achilleas.
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Victor P. Goldberg

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Victor P. Goldberg

Performance of a contract can be excused by a number of circumstances, notably impossibility, impracticability, and frustration. When performance is excused there remains the question of how to treat any payments or expenditures that were made prior to the occurrence of the contract-frustrating event. In Chandler v. Webster, the English courts decided over a century ago that the parties should be left where they were at the time of the frustrating event. Forty years later that holding was overturned so that now recovery might be had both for restitution of payments made prior to the event and for expenditures made in reliance on the contract. American law, as embodied in the Restatement (Second) of Contracts, has also favored restitution with some concern for reliance. Both the English and the American responses emphasize the injustice of the Chandler solution. This chapter argues that the English and American rules both got it wrong.
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Victor P. Goldberg

This chapter argues that the market-contract price differential should be reckoned at the time of the breach. It examines four cases (two from the United States and one each from England and Israel) that raise the issue in different contexts. Two arise in cases involving anticipatory repudiation. The third was framed by the courts as whether the subject matter was unique which would justify a grant of specific performance. The final case was treated by the Israeli Supreme Court as an unjust enrichment claim for restitution. These both raise the question of whether the plaintiff would have the choice of basing its damage claim on the price at the time of breach or at some future date.
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Victor P. Goldberg

Traditionally, preliminary agreements were not enforceable. In TIAA v. Tribune, Judge Leval held that some such agreements required that the parties negotiate in good faith, so-called Type II agreements. This chapter analyses one case, Brown v. Cara, in which a court found that the parties had entered into a Type II agreement. Examination of the record leads to two conclusions. First, the record provided no support for the Type II characterization. Second, the core problem for the parties was pricing of the option to unbundle. There were a number of mechanisms available to them for pricing the option explicitly; recognition of the good faith duty to negotiate was unnecessary.
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Victor P. Goldberg

When Erie County breached its contract to build a domed stadium, it was sued for damages. In litigation lasting eighteen years the courts finally rejected most of the damage claims. Some claims were for the plaintiff’s lost appreciation on adjacent lands; other losses were for the lost management contract. Some of the claims were rejected because the court applied the new business rule; others were rejected because the court concluded that the county had not assumed the risk. This chapter concludes that the results were correct.
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Victor P. Goldberg

Lake River v. Carborundum is casebook favorite for exploring the liquidated damage–penalty clause distinction. I argue that the case was framed improperly. Had the litigators recognized that the contract afforded one party an option, the result should have been different. The contract was for the provision of a service—setting aside capacity—which was valuable to the buyer and costly to provide for the seller. The primary purpose of the minimum quantity clause was the pricing of that service. The case raised indirectly a significant damages issue: if there is an anticipatory repudiation of a contract that is take-or-pay or has a stipulated damage clause, should the promisee’s ability to mitigate be taken into account when reckoning damages?
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Victor P. Goldberg

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Victor P. Goldberg

Professor Mel Eisenberg argued for an expansion of the excuse doctrines. He argued that performance should be excused in those instances when parties tacitly assume that a given kind of circumstance will not occur during the contract time (the shared-assumption test). In addition, he argued that there should be a partial excuse when a change in prices would be sufficiently large to leave the promisor with a loss significantly greater than would have reasonably been expected (the bounded-risk test). This chapter questions his first proposition by re-examining the Coronation cases and Taylor v. Caldwell. His bounded-risk analysis is badly flawed, resting on a dubious proposition, inconsistent with the cases he relies on, and, most importantly, recognizing the wrong set of circumstances in which parties would choose to limit their exposure to large cost changes.
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Victor P. Goldberg

After the publisher reneged on a promise to publish, the author sued and won. The court held that damages were too speculative and instead allowed the author to recover his reliance damages. He claimed that he should be compensated for the time he spent on the manuscript multiplied by his hourly rate as a lawyer. The jury rendered a compromise verdict which accepted the reliance theory and the court approved. Since the author did have the right to publish elsewhere and, in fact, did so, the damages should have been the costs of delayed publication. Had the contract made explicit that the publisher maintained an option to publish, there would have been no breach. Since the contract was on the publisher’s form, it should have been able to eliminate any ambiguity.